Israeli Prime Minister Benjamin Netanyahu is expected to consult with his Cabinet late Thursday, after failing to repair a rift with the United States over construction in East Jerusalem.

Mr. Netanyahu is due in Tel Aviv Thursday, where he will brief ministers on his talks with President Barack Obama and other U.S. officials in Washington this week.

Senior leaders of Mr. Netanyahu's ruling coalition are rallying behind the prime minister and his insistence that Israel will continue building settlements.

Before departing Washington, Mr. Netanyahu said the two allies had made some progress in settling their dispute.

U.S. officials want Israel to freeze a plan to build 1,600 new settler homes in East Jerusalem, which the Palestinians claim as a future capital. Mr. Netanyahu reiterated in Washington that Israel views all of Jerusalem as its capital, not a settlement.

The White House has said the housing plan undermines indirect peace talks the United States has offered to mediate. Mr. Obama asked Mr. Netanyahu to take steps to build confidence for the peace negotiations.

Separately Thursday, U.S. Defense Secretary Robert Gates said tensions in the Middle East are hurting U.S. interests in the region.

Jordanian King Abdullah warned Israel on Thursday that it is "playing with fire" by authorizing new construction in East Jerusalem. Iran's foreign ministry responded to the building plans by labeling Israel an aggressive, terrorist state.